capital protection

Today I wanted to provide some depth on how we use VIX products to manage risk in The Vega Fund portfolio. As far as we know, we’re the first fund in Australia to hedge in this particular fashion and hence some clarity is warranted. It’s not the only tool in...
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Extraordinary monetary stimulus programs, implemented over a sustained period, create real problems for the global financial system. Cracks are starting to show in the form of reduced Defined Benefit pension payouts and an erosion of business and consumer confidence. Investors are essentially forced to take on more risk to generate...
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Shane Fitzgerald, Principal at Monash Investors, says that the most important strategy they use to protect their investors’ capital is “setting a really high hurdle” on the investments they make. “We are looking for ’slam-dunk’ investments.” While having these high standards may result in missed opportunities, it gives the portfolio...
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The key to taking advantage of high volatility is remaining unemotional, which requires having a plan well ahead of time. It’s natural that in times of panic you’ll gravitate to the stocks you already own. Initially, you’ll likely play defence by reassessing the risks in your portfolio. As broad market...
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When markets go into a tailspin, investors tend to scramble for safety. The problem with this is that it can often be too late. As Peter Lynch once famously said: ‘The day after the market crashed in 1987, people began to worry that the market was going to crash.’” Investors...
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Chad Slater, Joint Chief Investment Officer of Morphic Asset Management, says you can’t protect capital on a 1-2 week basis. In equities, “you get paid to be scared. That’s why equities have generally made you more than any other investment class.” Instead, he suggests taking a longer-term view and looking...
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We are of the view that Brexit is likely to be a protracted divorce through which the UK economy is likely to suffer. There is also likely to be some spillover to continental Europe. We would avoid businesses leveraged to UK GDP in the near term and be very selective...
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The most effective strategy we have at Wilson Asset Management to manage volatility is our nimble and flexible mandate. We have the ability to hold high levels of cash when we cannot find suitable investment opportunities. Under our mandate, we can hold anywhere between 0 and 100% cash levels and...
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As a long/short manager, we hedge sharemarket risk for our investors by short-selling the shares of weak businesses when they are overvalued. By holding long and short portfolios of roughly equal size and composition, our funds have little or no net exposure to the share market. Our directional fund provides...
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Investors commonly measure volatility by looking at both the ‘good’ and ‘bad’ returns, often referred to as the ‘standard deviation’. Investors concerned with the level of risk within their investments need to be aware of the lesser known risk metric of ‘downside deviation’, which ignores the volatility of the ‘good’...
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When markets are in extreme fear or greed mode, new selling or buying can have an outsized impact on prices. Right now, many markets are near panic mode. We believe the reported selling of assets by Sovereign Wealth Funds (SWFs) is contributing to the scale of the plunge. The driver...
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Volatility is one of the key issues my retail clients have with the current market. Retail clients simply no longer have the appetite for large swings in the market, irrespective of larger returns. The attitude of investors has fundamentally shifted to preservation of capital. In finding a solution to my...
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With share-markets coming under pressure I thought it timely to revisit one of our most popular educational articles. The article was written by Peter Harper, Chairman of Harper Bernays, who draws on Aesop's well known fable The Hare and The Tortoise. Harper says the lessons learnt from such a fable...
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